CXW
CoreCivic, Inc.
$21.50
Real Estate Investment Trust
85%
P/FFO × Specialty REIT Multiple
Strong
·
Conviction
Undervalued
Trading 64.0% below fair value
You pay
$21.50
Bear
$48.98
Fair
$59.75
Bull
$70.52
Bear
$48.98
+127.8%
$2.48 FFO × 29x
Fair
$59.75
+177.9%
$2.48 FFO × 35x
Bull
$70.52
+228.0%
$2.48 FFO × 42x
Key Value Driver
FFO/share ($2.48) × specialty P/FFO multiple
Implied Market Multiple
8.7x
Summary
Our base-case estimate uses P/FFO × Specialty REIT Multiple. We then blend that result with the average analyst price target of $15.50 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $59.75 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 8.2% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $32.80 (54% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $15.50 (from 12 analysts). Our estimate is 357% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify